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Salary sacrifice arrangements

14 February 2017

A salary sacrifice arrangement is where an employee gives up the right to receive part of the cash salary due under their contract of employment in return for the employer’s agreement to provide some form of non-cash benefit.

One of the most common forms of benefit provided under salary sacrifice arrangements is an entitlement to childcare vouchers or workplace nursery schemes. Other common types of non-cash benefit include bicycle loans or pension contributions.

This Inbrief provides a general summary of how salary sacrifice arrangements operate and the main issues to watch out for. In particular, it deals with tricky issues relating to maternity leave.

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